Correlation Between Molson Coors and Ecolab
Can any of the company-specific risk be diversified away by investing in both Molson Coors and Ecolab at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Molson Coors and Ecolab into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Molson Coors Brewing and Ecolab Inc, you can compare the effects of market volatilities on Molson Coors and Ecolab and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Molson Coors with a short position of Ecolab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Molson Coors and Ecolab.
Diversification Opportunities for Molson Coors and Ecolab
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Molson and Ecolab is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Molson Coors Brewing and Ecolab Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecolab Inc and Molson Coors is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Molson Coors Brewing are associated (or correlated) with Ecolab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecolab Inc has no effect on the direction of Molson Coors i.e., Molson Coors and Ecolab go up and down completely randomly.
Pair Corralation between Molson Coors and Ecolab
Considering the 90-day investment horizon Molson Coors Brewing is expected to generate 1.67 times more return on investment than Ecolab. However, Molson Coors is 1.67 times more volatile than Ecolab Inc. It trades about 0.23 of its potential returns per unit of risk. Ecolab Inc is currently generating about -0.15 per unit of risk. If you would invest 5,577 in Molson Coors Brewing on August 26, 2024 and sell it today you would earn a total of 459.00 from holding Molson Coors Brewing or generate 8.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Molson Coors Brewing vs. Ecolab Inc
Performance |
| Timeline |
| Molson Coors Brewing |
| Ecolab Inc |
Molson Coors and Ecolab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Molson Coors and Ecolab
The main advantage of trading using opposite Molson Coors and Ecolab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Molson Coors position performs unexpectedly, Ecolab can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Ecolab will offset losses from the drop in Ecolab's long position.| Molson Coors vs. Budweiser Brewing | Molson Coors vs. Boston Beer | Molson Coors vs. Anheuser Busch InBev SANV | Molson Coors vs. Ambev SA ADR |
| Ecolab vs. Linde plc Ordinary | Ecolab vs. PPG Industries | Ecolab vs. Sherwin Williams Co | Ecolab vs. LyondellBasell Industries NV |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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